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Bloomberg reported today that since the recession, the six biggest US banks have spent more than $100 billion in litigation, lawyer’s fees and settlements.
The data showed at least 40 percent of those expenses had been incurred since January 2012, after the authorities really started going after banks.
JPMorgan has been one of the biggest patrons of the legal fraternity shelling out $21.3 billion in legal fees and litigation since 2008.
It has also added $8.1 billion to reserve for buybacks of mortgages. A big part of the money went to settling claims over manipulative mortgage deals and foreclosures.
Since the economy started to recover and possibilities of bank failure becoming remote, the too-big to-fail have begun facing an increasing number of actions by federal regulators. Accusations of misleading buyers of mortgage-backed securities, allegations of rigging interest rates worldwide, allegations of manipulating markets – you name them, it seems US banks and the too-big-to-jail have done them.
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Of course there’s an easy way out with SEC actions – you pay up without denying or admitting guilt.
That’s what the banks have been doing; only the legal costs keep spiraling out of control, as federal agencies keep bringing one action after another.
This month, Eric Holder promised to the Wall Street Journal that he’s going to bring new cases tied to the failure of the US economy.
Bloomberg compiled the data from quarterly reports made by the banks to the Federal Reserve, the SEC and to investors during the period from January 2008 to January 2013.
Currently the banks keep on fighting actions.
JPMorgan, by far one of the biggest defendants, is facing an action where a US housing regulator is seeking more than $6 billion on grounds that JPMorgan sold bad mortgage bonds to Fannie Mae and Freddie Mac. The bank’s CEO is also fighting criminal probes.
Bank of America has spent $3.3 billion in legal costs only in the first half of 2013, with a total legal cost of $19.1 billion.
